Are there statements from IBM insiders revealing why OS/2 was dropped?

Question

In the early to mid-90s I was an OS/2 user and supporter. The operating system was originally jointly developed by both Microsoft and IBM. Both companies claimed it was the future, including public statements from Bill Gates. So major business application developers (Lotus, Wordperfect, etc) spent millions making programs for OS/2 version 3 (first version with GUI) and ignoring the "dead-end" Windows. Well, there was a conspicuous hold-out -- Microsoft. As far as I know, they never spent a dime developing 32-bit OS/2 versions of its application programs. IMO, they were planning a double-cross of all its competitors, and it worked outstandingly.

But that's just introduction to my question. Are there IBM insiders that have gone on the record to explain in the face of this betrayal, why IBM folded? One week before the release of Windows 95, IBM announced that OS/2 would not compete with Windows. To me, that was worse than what Microsoft did. Shortly thereafter, the IBM software division in Florida was shut down.

From an outsider's perspective (mine anyway), it can only be explained by a civil war within IBM between its American hardware and software groups. I can't find a link, but around 1994 IBM ran double page ads in the major computer magazines imploring portable customers to "Demand OS/2 on your next portable." I did just that, calling the IBM store and tried to order an IBM Thinkpad with OS/2 pre-installed. They would not do it. I did try insisting, and referred her to the current ads. She said something like, "Yes, we wish they wouldn't have done that." BTW this was long before Lenovo bought the rights to Thinkpad and other IBM computers.

What was particularly vexing to me about all this is that OS/2 Warp was clearly superior to Windows, not to mention IBM's decade-long claim that this was their future in the business and home market.

Answer 1

As others have noted, it's difficult to locate statements from IBM insiders dishing exactly why OS/2 was sidelined, but I did find this 1996 New York Times article which quotes John W. Thompson, "the IBM general manager in charge of the software." The Times uses some weasel words ("implied," "all but conceded"), but this may be as close as we will get to a direct quote from an IBM insider:

[Thompson] implied in an interview last week that the company had little choice but to continue supporting OS/2 because I.B.M.'s most important business customers still use it. But the company has all but conceded that OS/2 will not compete for users in the consumer market.

OS/2's estimated 11 million users are a fraction of the 140 million users of Windows, according to the International Data Corporation of Framingham, Mass. But Mr. Thompson said that the 3,000 largest OS/2 customers, which include big banks and insurers, generate 25 to 30 percent of Big Blue's $72 billion in annual revenue, with purchases of other types of computers, services and software.

Mr. Thompson said he presented I.B.M.'s chairman and chief executive, Louis V. Gerstner, all the options concerning OS/2's future, including killing it, at a meeting this spring. The decision to continue supporting it was made, he said, because the company had made a commitment to its clients, many of whom spent a great deal to write custom programs that run on the software. "OS/2 is broader than just an operating system to the I.B.M. company," he said.

It appears the key points are:

• IBM acknowledged OS/2 had failed to compete in the consumer market
• OS/2 had some success in the business market (25-30% of $72 billion, although that appears to include "computers, services and software" and not merely the operating system)
• Given all considered choices (including killing off OS/2 outright), Big Blue decided not to abandon paying corporate clients while quietly exiting the consumer market

The original poster said:

it can only be explained by a civil war within IBM between its American hardware and software groups.

I don't see anything in the Times article suggesting such an internecine conflict within IBM. Rather, Gerstner was offered all options, and doing the financial arithmetic, opted to focus on continued profits and IBM's competencies.

Answer 2

IBM recognized that Microsoft was entrenched in the preinstalled retail and commercial markets, and wisely (sadly, but wisely, because I also loved Warp on my 486DX33) realized that Windows 3.1 compatibility was pointless in the face of the steamroller that was Windows 95.

In other words, some fights can't be won.

Note that soon after this, IBM threw it's weight behind a MS competitor that could win (Linux) in a battlefield that MS didn't dominate (the server market).

Answer 3

IBM in essence, is a hardware company, not a software one. We see that Gerstner was C.E.O., and IBM was loosing money. The lack-luster reception of first the PS/2, and then the PS/1 (which followed it), meant that IBM was eventually going to withdraw from the market place. Lou Gerstner hastened the process.

There is a book called "Big Blues" / "the unmaking of IBM" by Paul Carroll, that features this. It was also in the glossies at the time.

One problem was that Florida started asking for taxed based on global sales, rather than local sales. This killed Boca Raton (home to the DOS/OS2 group). This happened around 1995/6, but the programming was moved in reduced form to Austin in Texas.

This is where DOS 2000, OS/2 4.0, 4.5x comes from. The DOS is simply a superinposition of the DOS 7.00 fixes. OS/2 continued to be managed, although no major version coming. 4.0 has a new set of wallpaper.

But without digging out the glossies, I can't give statements from actual IBMers.

Answer 4

I think that your question does not give quite enough credit to Microsoft, and the competitive advantage they established over OS/2 by making the Win32 API a common feature of both Windows 9x and Windows NT.

Windows NT was originally envisioned within Microsoft as a successor to OS/2, and the first version of NT was already released by 1993. Essentially, Microsoft was positioning itself to be in front of OS/2 (IBM) in the Enterprise market too, not just the consumer/home PC market. NT had a lot of compelling, advanced, features for the enterprise. So it really was a step beyond OS/2.

And this is where the Win32 API becomes so significant. By targeting this common API, application developers could write compatible software for both consumer and enterprise versions of Windows. Microsoft led the way on this with their own very popular MS Office apps, and other application developers soon followed.

OS/2's lack of support for the Win32 API became the limitation that it would not overcome. It can be argued that IBM had a very good OS product in OS/2 Warp, but they weren't willing to farther their investment by adding Win32 support and going head-to-head with both Windows 9x in the consumer market and Windows NT in the enterprise.